Closing beer loophole would have 'collateral damage,' critics warn

Despite acknowledging flaws in a bill that could harm other businesses that sell alcohol, a Senate committee pushed through legislation Wednesday to keep cold beer sales only in liquor stores.

The Senate Public Policy Committee voted 8-1 on a bill that would prohibit restaurants within grocery or convenience stores from obtaining a restaurant liquor license.

As the bill stands, however, there would be “collateral damage,” warned Grant Monahan, president of the Indiana Retail Council.

Jeff McKean, an attorney who deals primarily with alcohol permits, said the measure could shut the door on other entities trying to sell cold alcohol, such as golf courses, if 90 percent of their sales are not from nonalcoholic products.

He said the state issues more than 1,000 restaurant permits, and a large portion of those would not meet the 90 percent test.

“I’m here because it scared the heck out of me,” said McKean, who was not lobbying for any particular group.

Lawmakers on Wednesday presented the measure in both the House and Senate public policy committees as an amendment to alcohol-related bills after Republican leaders found out two Ricker’s convenience store locations were selling cold beer.

“This is clearly contrary to the legislative body’s affirmative decisions for the last 30 years and a lawsuit that was resolved remarkably just months before this last filing,” said House Speaker Brian Bosma, R-Indianapolis. “This is an agency that has ignored history, has ignored the will of the legislature and has inaccurately and incorrectly issued a license for something the General Assembly, who sets alcohol policy, has said no to.”

Ricker’s, which just invested thousands of dollars on renovating its gas stations for a small “burrito concept” restaurant, buying liquor licenses and training staff, would be forced to revoke its two restaurant liquor licenses.

But other businesses, too, might find themselves on the wrong side of the law should the measure pass.

Grapevine Cottage, which sells wine, breads and wine accessories in Fishers and Zionsville, also wouldn’t qualify to keep its licenses under the changes because owner Douglas Pendleton says its food profits just can’t keep up with wine sales to meet the required threshold in order to qualify as a gourmet grocery store.

Pendleton estimates that there are probably eight gourmet stores in the state that would no longer be able to stay open.

“Frankly, if this law passes in its current form,” Pendleton said, “I’ll be bankrupt by July.”

Senate Public Policy Chairman Ron Alting, R-Lafayette, argued stores like Grapevine Cottage should not be selling as much alcohol as they do anyway because the law calls for them to “primarily” sell food. Less than 10 percent of Pendleton’s profits come from food.

Wednesday’s debate was the latest in the clash between grocery and convenience stores and liquor stores over the state’s alcohol policies. For years, liquor stores have shot down calls to allow for Sunday sales and for grocery and convenience stores to sell cold beer. This year's legislation on Sunday alcohol sales and cold beer sales didn't even make it to a committee vote.

While the House committee delayed a vote until Monday when lawmakers could write up a new amendment, the Senate went ahead and pushed the bill onto the floor for amendments.

Alting did say he wanted to research the potential for groups to be unintentionally shut out.

“That’s nobody’s intent for that to happen, and I want you to be aware of that,” Alting said. “We’re going to take a long deep look at that.”